Kevin_Zhang

Bitcoin Bearish Bat 1H, Potential 5.82% Drop!

Short
COINBASE:BTCUSD   Bitcoin / U.S. Dollar
Hi all,

BTCUSD is on its way to forming a bearish bat formation on the 1-hour chart. The potential reversal zone is formed of three ratios:
2.0 BC projection at 5443.23,
0.886 XA retracement at 5421.15,
1.618 alternate AB=CD at 5418.98.

The terminal price bar has yet to establish, but this is a pattern that traders should watch out for on the 1-hour.

On the major timeframes, the daily chart has seen RSI rise above overbought territory quite recently. Looking at past price action, excluding the steep rise that Bitcoin is known for, price action following has obeyed this indicator quite well. Also, there has been a noticeable drop in volume since the 3rd of April, indicating that the current trend pushing price from the C point up towards the PRZ may not be a strong enough trend to continue beyond the PRZ.

Profit and stop loss levels are as follows:
Stop loss at 1.13 XA projection, or 5564.10
Take profit is split between management level and final take profit.
Management level is at 0.382 AD retracement, or 5264.06. This is when we move our stop loss to break even and consider taking partial profit.
Final take profit level is at 0.618 AD retracement, or 5126.19.

The overall risk to reward ratio for this trade is 2.62.

Hopefully, the pattern completes for us to trade!


Thanks for reading everyone!
Kevin

Comment: Price has confirmed the 1.618 alternate AB=CD as well as the 0.886 XA retracement ratios. Ideally, price should have confirmed the 2.0 BC projection as well, but given that the main 0.886 retracement measurement was confirmed, there could be a chance price reverses downwards already. Therefore, I'm watching price action to decide whether to enter now or not.
Comment: RSI also overbought on the 1H timeframe. There's also strong selling volume observed prior to the establishment of terminal price bar which could indicate a reversal of the trend. Still watching actively.
Trade closed: stop reached

Comments

Price has confirmed the 1.618 alternate AB=CD as well as the 0.886 XA retracement ratios. Ideally, price should have confirmed the 2.0 BC projection as well, but given that the main 0.886 retracement measurement was confirmed, there could be a chance price reverses downwards already. Therefore, I'm watching price action to decide whether to enter now or not.
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Kevin_Zhang Kevin_Zhang
@Kevin_Zhang, Posted as a reply by accident! Changed as an Update Idea post.
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